Article excerpt

Cameco reports 85% drop in Q2 earnings

--

SASKATOON - Uranium miner Cameco (TSX:CCO) booked an 85 per cent drop in second-quarter earnings on lower sales, lower prices and higher costs, but said it expects demand and uranium prices to pick up before the end of the year.

The world's largest publicly traded uranium miner said Friday that second-quarter deliveries were low, in line with its expectations that it would be the quarter of 2012 with the weakest demand.

On top of that, the contracts it delivered on during the quarter came with average realized uranium prices that were 10 per cent below where they were during the quarter a year ago.

Demand for uranium fell off after last year's nuclear disaster in Japan, and contracts for the quarter were negotiated when prices were still low, said president and CEO Tim Gitzel on a conference call.

"As we move out of lower price contracts that came into effect when uranium prices were lower and into higher price contracts, we expect to see a general trend upwards," he said, adding that deliveries are heavily weighted to the fourth quarter.

While the industry continues to be in "wait and see" mode, Cameco said several positive developments have emerged. Japan gave approval to restart two reactors after being confirmed safe.

Since the previous quarter, the nuclear industry continues to experience near- to medium-term uncertainty. However, positive developments have emerged as well.

"We also believe these initial restarts will help pave the way for additional restarts in the near future," the company said.

"Overall, the uranium market continues to be in a wait-and-see mode as utilities are generally well covered for the next few years, and suppliers are similarly heavily committed. However, we have seen the emergence of some long-term contracting over the past few months."

Net earnings for the quarter came in at $8 million, or two cents per share compared to $55 million, or 14 cents per share in the same period last year. …